BlackBerry: A passport to turnaround?
Yes, we almost wrote a requiem for this innovative company that brought the world emails in cell phones. Life has been difficult for BlackBerry, but the company hasn’t quite given up yet. It even unveiled a new, high-end smartphone, Passport, on 24 September 2014, which BlackBerry’s CEO, Mr. John S. Chen feels will turn the […]
Yes, we almost wrote a requiem for this innovative company that brought the world emails in cell phones. Life has been difficult for BlackBerry, but the company hasn’t quite given up yet. It even unveiled a new, high-end smartphone, Passport, on 24 September 2014, which BlackBerry’s CEO, Mr. John S. Chen feels will turn the company around. But not so fast, Mr. CEO, as revenues are still meager by peer standards, and last quarter still recorded a big loss relative to revenue. However, hope seems to be quite alive at BlackBerry, making Mr. Chen appear like a miracle worker bent on raising BB from the grave. This might just work, folks: my wife, a BB supporter, is even planning to switch to Passport from her Android device.
Two days after launching Passport, BB announced a loss of $207 million during the second-quarter ending June 30, 2014. The revenue collected during the period was a modest $916 million, which is $50 million lower than the figure for the first quarter of the year. The company’s cash in the bank holds steady at $3.1 billion, however. Although Mr. Chen has already declared a complete turnaround, no analysts have agreed with him. There is obviously a lot to be said for optimism, since the CEO’s belief could be the thermostat that regulates the amount of success that BlackBerry can have. So, I personally have no issues with Mr. Chen declaring victory, though we will need to see the numbers. Hopefully, the series of severe cutbacks and layoffs at BB had ended and the company is again in a position to strategically hire employees in areas targeted for growth.
Will BB ever come back to the position it once held as the number one cell phone company? It’s doubtful. While the company may not die off totally, it could remain a marginal player in the midst of all these vicious “animals” (Apple, Samsung, and the gang from China). This assessment holds in spite of Passport, a phone that targets business customers. Many U.S. government departments have replaced BB as their secure phone, perhaps because the company has not been doing well for many years now. Also, I am aware of a major U.S. defense contractor that has replaced BB with Nokai running Windows Mobile.
Mr. Chen announced last week that his company had received 200,000 orders Passport; and claimed that the device had sold out in six hours on the BB store and 10 hours in Amazon.com. Well, the numbers are quite modest compared to the performance registered for iPhone 6, which went on sale two weeks ago and sold 10 million units in just a few days, and the demand is still outrageously high. I visited my local carrier (AT&T) on Long Island, New York a few days ago, to place my order for iPhone 6 Plus. It would take me 60 minutes to be able to talk with an attendant because of the queue, and between 30 and 45 days for an order for iPhone 6 Plus to be filled. And this is more than two weeks after launch.
Blackberry has obviously been having problems for a few years, although the company’s problems seem to have peaked subsequent to the exit of the former CEO Thorsten Heins during the first week of November 2013 and John Chen, former CEO of Sybase, was picked to act as an interim CEO.
BlackBerry has really been very sick and its eventual demise was imminent at some point late last year. In September 2013 the company wrote-off nearly $1 billion in unsold inventory of its then new line of smartphones, including the touch-screen Z10 model. There were steady layoffs, including 4,500 in September 2013. This former high-tech innovator has suffered from big-time service goof-ups, coming two-years late into the smartphone business which the company actually helped create, and failing to form partnerships. In the wake of the company are of course a few remarkable innovations. The superior security features of BB phones helped push the devices into the palms of senior corporate executives and government people. BlackBerry also introduced wireless e-mail to the planet, an innovation that is reminiscent of, but precedes, the smartphone. The BlackBerry Messenger (BBM) also elevated the tech portfolio of BB. Unfortunately, these attributes were not sufficient to prevent the deterioration of the company, in the face of Apple, Google, and Samsung, to name a few fierce competitors who pushed BB to the wayside. In today’s tech landscape, you have to keep innovating to at least stay on the curve.
Frustrated and despondent, BlackBerry put itself out for sale after all efforts to hold on failed. There have been joint bids for BB, such as that by the two BB’s co-founders, partnering with Cerberus Capital Management and Qualcomm Inc., a mobile-phone chip maker. The Chinese company Lenovo even showed some interest in acquiring BB.
BlackBerry’s efforts to find a buyer failed late last year, and a tentative $4.7 billion plan to take the company private went bust. So the company decided late last year to restructure and remain public. Going forward, while BB may not die outright, it is doubtful that it will be able to compete with today’s big guys in smartphone.
The take-away from this article is that BlackBerry has come out with a smartphone, Passport, with features that rival iPhone 6. Too much water has passed under the bridge to enable BlackBerry rise up to its heydays status as the number one cell phone company.